The end of the recession has given a clear boost to sales of architectural paints. Sales growth in 1994 is expected to run about 4%, and prospects are good for continued strong sales in 1995. This good news, which follows several years of disappointing results, is due to the spurt earlier this year in now housing starts – a result of low interest rates and the end of the recession – and strength in the home repaint and renovation markets, says Chuck Bunch, general manager for architectural finishes at PPG Industries (Pittsburgh).
Also, says Bunch, there do not seem to be any major shifts in consumer preference between traditional wood and Vinyl or aluminum siding for home exteriors. And – thanks to the economy – “there is enough volume to go around,” he adds.
But as lumber shortages drive up wood prices, companies that supplypaint primarily for new housing are concerned that their market share could shrink. At the same time there is an upward trend in polyvinyl chloride costs that could help balance out the lumber price spike.
For interior paints, the drive to bring paints to the market with zero volatile organic compounds (VOCs) has continued at a slow pace, with a few smaller brands following the lead of ICI subsidiary Glidden (Cleveland), which introduced a pioneering zero-VOC line in 1992.
- BIG QUESTION. Other major suppliers say they are technically able to sell zero-VOC paints but do not yet believe there is sufficient public demand to justify a major effort. One marketer, who sees zero-VOC as at best another interesting niche, asks, “Glidden brought the paint to the market, but did the market want it?”
Glidden itself has tended to emphasize more the odor-free aspect of its zero-VOC paint instead of the purely environmental sales pitch. It has also tried to overcome the limitations of its original small selection of 15 premixed colors.
At the end of 1993, Glidden introduced a zero-VOC, “tint-base” product to which the customer could add solvent-based tints to make-464 different shades. According to Glidden, the addition of tint amounted to 10 gms of solvent/liter, which was “imperceptible” and did not degrade the odor-free performance.
Most sellers into the architectural market say they are bringing lower-VOC content products to market in expectation of meeting the 1996 federal deadline to cut VOC content.
In paint marketing strategies, the trend to more consumer sales through large do-it-yourself outlets continues in 1994. At the same time, use of independent paint outlets catering especially to professional paint contractors continues to be strong. While large suppliers such as PPG have tried to lure professionals to the big outlets, several smaller companies continue to rely on the small paint store market, frequently selling high-quality products at a premium price.
One group that has aggressively pursued the high-end market is Akzo Nobel Coatings (Troy, MI), which has been selling European-developed Sikkens brands decorative coatings into the U.S. market since 1984 and manufacturing in the U.S. since 1987.
- EMPHASIS ON QUALITY. According to Ed van Rossum, v.p. of Akzo Nobel’s decorative finishes unit, the company’s strategy of emphasizing product looks, durability, and easy maintenance, as well as selling through independent dealers who can educate customers, has led to consistent sales growth that is above industry averages. Van Rossum says professional contractors in the U.S. are getting away from the “quickness and cheapest” mentality and are responding to a European-type emphasis on quality and professionalism.
Any final assessment of 1994 in architectural paints and coatings probably will focus on price increases, which are beginning to affect suppliers and are likely to continue into 1995. Some architectural coatings suppliers have already announced price hikes; others say increases for their products are inevitable. If increases are topped by another severe winter, the industry may begin 1995 in worse shape than it was early this year.
Sales of architectural paints are expected to increase 4% in 1994, compared with the previous year, and are likely to continue growing in 1995. This boost results from the end of the recession that had slowed housing starts and the repaint and renovation markets. Suppliers of interior paints are slowly moving toward providing products with no volatile organic compounds (VOC). However, many say that that there is still not enough public demand to warrant full-scale production of zero-VOC products.